The German Corporate Governance Code (Code) provides significant guidelines for the management and monitoring of German listed companies and includes recognised national and international standards of good, responsible corporate governance. By making corporate structures in Germany transparent and comprehensible, the Code is intended to promote the confidence of national and international investors. Efficient cooperation between the Board of Managing Directors and Supervisory Board, the safeguarding of the interests of shareholders and lenders and openness and transparency in corporate communications represent the cornerstones of good corporate governance. The Government Commission “German Corporate Governance Code” has already revised the code several times, most recently on June 12, 2006 and published in the online version of the Federal Gazette (Bundesanzeiger) on July 24, 2006.

Good corporate governance has always been a top priority at Eurohypo AG. The declaration of conformity with the German Corporate Governance Code required by the German Stock Corporation act is published in the Annual Report and on the website under “Company/Corporate Culture/Corporate Governance”. The declaration of conformity explains any deviations from the recommendations of the Code. It also comments on the extent to which Eurohypo AG currently complies and in future will comply with the recommendations of the Code in the version dated 12 June 2006.

The bank also publishes its previous declarations of conformity under the above heading on the website. In addition, to further improve transparency, as well as the Articles of Association, Eurohypo AG has published the Rules of Procedure for the Board of Managing Directors and the Supervisory Board as well as the membership of the Supervisory Board committees on the Internet. The Corporate Governance heading also includes details on the remuneration of the Board of Managing Directors and the Supervisory Board.

Eurohypo AG complies with the recommendations in the German Corporate Governance Code taking into account bank specific issues. Where Eurohypo AG deviates from suggestions of the Code, this is due to the fact that compliance with the suggestion does not appear practical. With regard to financial year 2006, the following points are highlighted.

Remuneration
As previously Eurohypo AG is publishing the main features of the remuneration system and individual details concerning the remuneration of the Managing Directors and members of the Supervisory Board. The individual details on pages 105 ff of the Management Report concerning the remuneration of the Board of Managing Directors and members of the Supervisory Board and the details this section refers to contained in the Notes constitute the remuneration report within the meaning of the German Corporate Governance Code. The remuneration report is a component of this corporate governance report.

Supervisory Board
Eurohypo AG considers the election or re-election of members of the Supervisory Board on different dates for differing periods of office suitable only in exceptional cases, because of concerns that constantly having to induct new members would impair the quality of the work of the Supervisory Board if Supervisory Board members are appointed for different periods of office.

Since the retirement of Messrs Dr. Manfred Gentz, Dr. Hugo Banziger and Dr. Andreas Georgi, the district court of Frankfurt/Main had appointed Messrs Klaus-Peter Müller, Dr. Achim Kassow and Wolfgang Hartmann as members of the Supervisory Board by the resolution dated April 4, 2006. They were selected as members of the Supervisory Board by the following Annual General Meeting - based on the Code recommendation in accordance with 5.4.3 Clause 1 to elect members on an individual basis. Electing members of the Supervisory Board should also be on an individual basis in future, although Section 8 Sub-section 2 Clause 3 of the articles of association of Eurohypo AG gives the option of electing shareholders as members of the Supervisory Board by means of lists in the Annual General Meeting.

In accordance with 5.3.2 of the Code, the audit committee should deal with matters of risk management for the bank in addition to to matters of accounting and auditing. The Supervisory Board of Eurohypo AG has not assigned matters of risk management to its audit committee but to its risk committee. It deals with risks such as the bank's credit, market and operational risks. The fact that the chairman of the audit committee is also a member of the risk committee ensures that the audit committee has comprehensive information on risk management matters.

The employee representatives carry out separate preparations for the Supervisory Board meetings. Shareholder representatives carry out these preparations as required. The Supervisory Board did not review its efficiency in 2006 as result of its new composition. It shall however continue to carry out an efficiency audit regularly.

Directors´ Dealings/Conflicts of interest
With regard to the details required in connection with Directors' dealings and pursuant to 6.6 of the Code, there were no transactions by the Board of Managing Directors or the Supervisory Board subject to reporting requirements during the period under review nor were there any conflicts of interest for members of the Board of Managing Directors or the Supervisory Board requiring disclosure. There were no transactions to report carried out by directors under Section 15a of the Securities Trading Act (WpHG).

Annual General Meeting
The bank again has offered its shareholders the opportunity to be represented by a proxy at the 2006 Annual General Meeting. The proxy however was not available for contact again during the proceedings of the meeting. In 2006, a live webcast went out concerning the speech delivered by Bernd Knobloch, the Chairman of the Board of Managing Directors, at the Annual General Meeting.

The Board of Managing Directors · The Supervisory Board